TAX REVENUES for the first two months of the year were more than €1.05 billion ahead of the same period last year, figures from the Department of Finance show.

The exchequer returns, published yesterday, put overall tax revenue for the end of February at € 5.9 billion, up nearly 22 per cent on last year.

Significantly, the tax take was also € 656 million or 12.5 per cent ahead of the department’s own expectation. However, the ministry warned there were two specific factors driving this “over performance”.

The large year-on-year increase was partly due to the late payment in January of more than € 250 million in corporation tax which had originally been due in December.

The figures were also boosted by a 32.7 per cent surge in income tax receipts, which came in € 643 million up on last year, reflecting the impact of the universal social charge and the technical reclassification of receipts from employers which they had previously returned as PRSI.

While monthly tax receipts are notoriously volatile, they remain one of the timeliest measures of the health of the economy.

VAT and excise duties – the other of the “big four” tax-heads – performed close to expectations so far this year, coming in marginally up on the same period last year, although VAT receipts were lower than anticipated. This could mean that the two percentage point increase in VAT, introduced in Budget 2012, has depressed consumer spending by more than expected.

The figures showed the increased tax and non-tax revenues were offset by the higher cost of servicing the national debt. The State has spent € 891 million so far this year servicing the interest on its debt, compared with € 626 million by the end of February last year, reflecting the State’s bigger debt burden.

The figures showed overall spending for the month was € 7.5 billion, € 475 million or 6.8 per cent up than the same period last year. Current, or day-to-day, spending by the Government was €7.16 billion in the first two months of the year, up 7.4 per cent on the same period last year. An overspend in the Department of Social Protection, related to income tax/PRSI reclassification, was the main reason.

The exchequer deficit at end of February stood at 2.07 billion, up from €1.94 billion recorded at the same stage last year. The overall exchequer deficit for 2012 is expected to be in the region of €18 billion.